Kinetics of insulin removal from peripheral circulation suggested that the first step in uptake of insulin by tissues might be binding of insulin to specific receptors on the luminal surface of capillary endothelium. To study this possibility, methods were developed for isolating capillaries from adipose tissue and measuring binding of 125I-insulin to capillaries. The relationship between insulin receptors of capillary endothelium and receptors of fat cells is under study. Lipid accumulation in muscular arteries of diabetic rats was studied with electron microscopy. Tissues were taken 4 days after induction of diabetes with streptozotocin. Lipid deposits were found in medial smooth muscle cells, near mitochondria and sarcoplasmic reticulum, in muscular arteries in 9 of 24 diabetic rats and in 0 of 17 normal rats. The amount of lipid deposited was closely related to plasma FFA concentration. Thus, lipid deposition in muscular arteries during acute diabetes may result from high concentrations of FFA in plasma.